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The Big Bored: NYSE Traders Look for Diversions as Life Slows on Floor

Even as Markets Gyrate, Electronic Trading Has Cut the Work; Solace in the 'Movie Room'

By

Mary Pilon

Updated May 4, 2009 12:01 a.m. ET

On Thursday by 10:30 a.m., trading had been under way for an hour on the floor of the New York Stock Exchange. Down a stone stairwell, half a dozen traders sat in a dark room, slumped in black office chairs watching a movie.

Officially a members' lounge, the "Movie Room" has screened hundreds of DVDs on a TV set during trading hours, traders say. "Rambo," "Star Wars" and "Wall Street" are among the favorites.

As the financial markets continue their wildest ride in decades, many once-frantic floor traders find themselves all dressed up in mesh-backed jackets with less work to do. Some say they're flat-out bored.

Trading Floor Slowdown

See details on the floor of the New York Stock Exchange.

"It's like coming into a funeral parlor each day," says Billy Blum, an institutional broker with W.J. Blum & Sons LLC. Mr. Blum has been semiretired since 2007 but still comes in a couple of times a month to oversee his business.

For years, the New York Stock Exchange relied on human beings to make markets long after other exchanges had switched over to electronic trading. But the Big Board serves as an icon of American capitalism, with TV cameras daily roaming its frenetic floors. Countless news photos of despondent traders, palm to forehead, expressed the pain and tumult of Wall Street's slide. Such high-drama scenes helped to highlight the role of the floor trader -- even if fewer are needed to handle today's transactions.

"It is vastly different," says NYSE spokesman Ray Pellecchia. "Years and years ago, [floor traders] were working; they would physically represent every order they got. Now, they don't need to do that. They can do that electronically."

In 2006, the NYSE launched a hybrid system that relies on both massive computer systems as well as floor traders who tote electronic devices. Before then, floor traders executed the bulk of orders -- simple and complex. But now they tend to handle mostly blocks of stock or complicated trades, or they step in to smooth the flow of orders during particularly volatile hours of trading.

The changes have made the NYSE more efficient, and the exchange says it has been gaining market share from other exchanges in recent months. Many market experts believe that electronic trading results in more competitive pricing, and thus benefits investors. But the shifts have been rough on the traders themselves. "I still go to the floor everyday because there's a part of me that keeps wishing to go back to the way it was," says Ted Weisberg of Seaport Securities, a 40-year veteran of the floor. "Realistically, I know that's never going to happen."

Much of the floor trading now takes place around the market's open at 9:30 a.m. and the closing bell at 4 p.m. That leaves plenty of time during the day for traders to take long lunches, grab a beer (or two) at nearby bars or head to the gym for an afternoon workout.

As recently as 2001, floor specialists -- an elite subset of traders -- handled as much as 15% of share volume, with little or no electronic aid. By late 2007, that rate was hovering in the 3% range, according to data from the NYSE. Today, the figure is closer to 9%.

But even elevated trading activity doesn't necessarily mean more bodies needed on the floor. About 1,500 traders populate the NYSE today, down from 3,000 five years ago. One floor specialist can now, with the aid of a computer, handle more transactions with less hassle.

Alan Valdes, a trader with Hilliard Lyons, says he's put on 10 pounds in the past year because "I don't have to run around the floor anymore."

Mr. Valdes, who joined the floor in 1977 as a "runner" shuttling messages between brokers, used to be lucky if he could get through the headlines of a single paper. Now, he reads three a day in their entirety, he says. When those are finished, he turns to his feed of blogs on his iPhone. "It's a sign of the times," he says.

NYSE maintains that the traders are essential beyond any stagecraft. "In no other market is there that agent right at the point of sale that can represent large, complex orders and provide a sophisticated response," says Mr. Pellecchia.

Big stretches of the traditional trading floor look abandoned for much of the day. Some trading posts sit empty. Computer screens that once displayed blinking data for traders now are illuminated by screensavers.

One part of the trading floor is referred to by some as "Jurassic Park" because it's where the older traders sit and rest. Another area called "Rodeo Drive," the corridor of elite trading posts of now defunct firms like Bear Stearns and Lehman Brothers leading up to the famed NYSE bell, is now fodder for jokes from traders about tumbleweeds.

As cameras and reporters from Fox Business News and CNBC canvass the gallery, traders openly engage in lengthy discussions over how the Rangers or the Yankees are doing. Some traders plug in headphones and watch YouTube clips online. Others browse goods on shopping Web site Amazon.com. Or they play computer solitaire.

Some prefer to sit in side rooms, reading the sports pages of the daily tabloids. A few page through thick novels or play crossword puzzles. Others nap slouched on benches in rooms adjacent to the trading floor.

Two traders say they play a daily game of gin rummy. They say they angle in toward trading posts when playing, in case a TV cameraman should walk by and film their game. Then, there's the movie room. Windowless, it contains a television set, a DVD player and about a dozen black leather chairs. Traders take turns choosing titles, but action and horror films top the play list.

The lounging about upsets some floor veterans. "I didn't come here to watch movies," bristles David Henderson, a trader with Dru Stocks who joined the floor in 1988.

Mr. Henderson isn't as busy as he would like to be either. Earlier this month, a decline in orders prompted the sale of his firm, Raven Securities. He now works for Dru Stocks and has stopped coming into the floor on Mondays.

Traders have traditionally earned some combination of salary and bonuses. In recent months, some, like Mr. Henderson, say their incomes have evaporated as firms have cut back on pay. Annual incomes vary widely, with a few traders cracking $1 million in good years.

Some are taking advantage of the slowdown to better themselves. Gordon Charlop, a trader with Rosenblatt Securities, used to spend hours after trading closed doing paperwork or meeting with clients. Now he studies. He's now close to earning a business degree from online-based Capella University that he started in 2004.

"My skill is being on the floor," Mr. Charlop says. "And I might need to reinvent myself."

Jim Maguire, a trader with Christopher J. Forbes, used to work before the bell, throughout the day and hours after close dealing with paperwork. Now, he takes off some afternoons to help shuttle his five sons from school to lacrosse, golf and track events around their home in Little Silver, N.J.

"When I was starting out, I think my original thoughts were that someday I'd bring my sons into the business," Mr. Maguire says. "I have other thoughts now."